Her Majesty's Government are fully engaged with the United States and our European Union partners in trying to move the peace process forward. The recent reduction in violence in Israel and the occupied territories is encouraging, but this must be sustained. Both parties should take the opportunity to move towards the implementation of the Mitchell and Tenet plans and the early resumption of negotiations. The Palestinian Authority should bring terrorists to justice and dismantle the infrastructure of terrorist organisations. Israel should withdraw its military forces from area A, lift restrictions and closures and freeze all settlement activity in the occupied territories.

What is the Foreign Secretary's response to the letter that he received from Shimon Peres about the call from Mr. Rafsanjani, one of Iran's leaders, for jihad operations against Israel to continue until Israel no longer existed? Given the vile propaganda that keeps coming out of Iran, the widespread suspicion that Iran had a hand in the attempted smuggling of 50 tonnes of rockets and other weapons aboard the Karin and the need for our struggle against international terrorism to be consistent, can the Foreign Secretary clarify where yesterday's Government announcement of a £28 million export credit guarantee for Iran fits into all of this?

I congratulate the hon. Gentleman on the ingenuity of his question. We condemn those who believe
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that the state of Israel should not exist. Indeed, there will be an effective peace process only if the state of Israel recognises the right of the Palestinians to their own viable state. At the same time, not only the Palestinians but everyone else in the Arab and Islamic world, which includes the state of Iran, must recognise the right of Israel to live safely within secure borders. That is fundamental to our approach towards the peace process, the approach of the United States and that of the European Union.

As for the question about relations with Iran, about which I thought that the hon. Gentleman was going to ask me, we believe that we can make these points better through dialogue with Iran rather than, as I think was implicit in his suggestion, by withdrawing diplomatic relations.

What possible justification was there for trying to prevent the leader of the Palestinians from attending the inter-faith Christmas mass at Bethlehem? What representations did the Government make to Israel about this? Is it not extremely dangerous, in the current situation, for anyone in the Israeli Government to present President Arafat as being the same as the terrorist organisations Hamas or Jihad?

We did not think that this restriction was justified. Our position is that closures should be lifted; that must apply to the leader of the Palestinian Authority, as it must to all residents within the occupied territories.

I wholly agree with my right hon. Friend in condemning all terrorism, but does he agree that the time has come for the debate to move forward and for people to start addressing these long-standing issues and the problems that have existed between the state of Israel and Palestine? Until we have a viable discussion on how to move matters forward, the issues that will extinguish the roots of terrorism will not be addressed. As one great statesman in this House once said, we need more jaw-jaw, not war-war.

Of course there has to be a political process towards a settlement of this long-standing conflict in the middle east, but a reduction in violence and terrorism is a pre-condition of any peace process. In that context, we greatly welcome the reduction of violence since President Arafat's speech on 16 December, in which he called for a halt to all military operations, especially suicide bombings. Since that date, just one Israeli has been killed and 15 Palestinians have died. That is a very significant reduction from the previous levels of violence.

We support the peace process and we support negotiations, but better efforts must also be made by both sides in the current context, particularly by the Palestinian Authority, to restrain the terrorist organisations based in the occupied territories from acting in Israel.

I welcome the Secretary of State' s even-handed approach to the problem. However, if we look at the Palestinian problem historically, does it not behove the Government to make extra efforts to ensure fair play for the Palestinian people? The issue has rightly been brought into focus because of the war on terrorism but many people outside this place believe that all the Palestinians get paid is lip service.

I fully understand the need for fairness towards the Palestinians. That is essentially and actively the approach adopted by Her Majesty's Government, not least in the context of the European Union, which is providing more aid to the Palestinian Authority, with our full support, than any other international donor. We are doing a great deal else to support the Palestinian Authority's legitimate activities and to relieve the humanitarian situation in the occupied territories. That is essential, as is a recognition by those who lead the Palestinian Authority and the rest of the Arab world of the right of Israel and Israelis to live in peace, with security.

Does not the Foreign Secretary accept that the peace process requires Palestine Liberation Organisation cum Palestinian Authority structures that offer strong leadership and the ability to control their citizens and uphold an agreement? What recent assessment has the Foreign Secretary made of Yasser Arafat's position in the PLO? When the Prime Minister next visits Israel and the middle east, will he deign to take with him the Foreign Secretary or, indeed, any other Foreign Office Minister; or with foreign policy now being entirely conducted from Downing street, will he and his Foreign Office colleagues continue to be sidelined and ignored?

On the serious part of the hon. Gentleman's question, we will continue to do all that we can to work for a settlement inside the occupied territories. The hon. Gentleman asks me about the position of the leader of the Palestinian Authority. He is the elected leader, and we work on the basis—it is wise for any hon. Member to do so—that we should deal with him as that elected leader. That is exactly the point that we have urged on the Government of Israel.

Following the question asked by the hon. Member for Hertsmere (Mr. Clappison), may I ask my right hon. Friend the Foreign Secretary whether the Israeli authorities have furnished him with any evidence to show that the arms being carried by the cargo ship that was apprehended by the defence forces were destined for the Palestinian Authority, rather than another terrorist group in the middle east?

The Israeli Government have passed to the United States Administration and ourselves information that they claim to have received about the destination of that ship and those who were sailing on it. The position of the US State Department and the United Kingdom Government is that we continue to assess all the information that we have received about the origin of that ship and its destination, but we have yet to reach firm conclusions.